Beware the Tech Bubble—But Stay Calm

How to Reap the Best of the Sector While Staving Off Irrational Exuberance

I spend a lot of time worrying about the next tech bubble. It's my job to worry, of course, and this year, worrying became a full-time occupation.

Ever since Facebook's stock price rebounded this year to the level of its initial public offering, tech startups have seen an incredible run-up in valuations. Boxrecently raised financing that valued the data-storage company for businesses at $2 billion, almost double its value when it raised funds in the summer of last year. The value of Palantir, whose software analyzes data...